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Economic News Articles in the Great Recession — Archive for the week of 02-26-2012

The significant news of the week was the rise in oil prices, due mostly to speculation about the Iranian conflict that is brewing in the Persian Gulf. That’s the news, as predicted, that will drive a lot of other news this year.

Other economic indicators are all over the place: consumer confidence is up while factory orders for durable goods are down. Housing sales are up while housing prices are going down further. The euro zone’s Greek bailout is both confirmed and still in limbo. U.S. economic growth is revised upward 3%, and a Fed survey says economic growth is seen in every sector of the U.S., even as Fed Reserve Chairman, Ben Bernanke, tells congress to expect very little job growth in 2012 with such poor economic growth.

How do you make sense of so much conflicting information? You read the Great Recession Blog because these are the kinds of things to be expected in a long-term economic depression, and anyone reading here is beginning to realize if they didn’t already that that is what the Great Recession really is. That’s what it will be seen as in hindsight. Long periods of economic turmoil typically see conflicting indicators and a lot of volatility as people keep trying to right something that doesn’t want to be righted and keep hoping for something that keeps defying hope.

So, what you have to look for in order to understand where we are headed is the fundamentals of the economy and long-term trends, not short-term indicators. The long-term trends that will be of greatest impact this year are … Iran and the price of oil, the euro zone problems, and the backlog of foreclosures that banks will be selling now that the foreclosure case has been settled. These are the things that will most drive the economy, not the machinations of government or the sentiment of consumers. If, for example, you factor in those big three and understand where they are most likely going, then you know the rise in consumer confidence means nothing for the long term. It is merely a reaction to what people perceive, and their perceptions are based on what most of the media parrots from the government, not on a deeper awareness of these larger gears that are turning in the economic engine right now.

Nevertheless, so you can see how the usual economic indicators work during such times as these, here they are:

Economic indicators seen in the news this week

02/27 Stocks still floating above oil While stocks have hit their highest level in years, the price of oil is weighing on them. Oil has risen 14% in the past month, and closed Friday above $109. A strengthening economy and higher tensions with Iran have boosted oil prices.

02/27 Why Gasoline Prices Are So Different Around the US Retail gasoline prices in the US have skyrocketed over 13 percent — more than 40 cents — so far this year, as the price of crude oil has surged to the highest level since last May. “There’s never been more diversity in crude oil prices.”

02/28 Orders for durable goods plunge most in 3 years January’s 4% plunge comes after three straight months of increases for new orders, which had been seen as an encouraging sign that manufacturers were finding higher demand. Economists called the January numbers “terrible” and “shockingly weak.”

02/29 Fed Survey Shows Economic Growth Throughout U.S. The U.S. economy started the year off well with busier factories, higher retail sales, more jobs and growth in home sales. The Fed said that all 12 of its banking districts reported some level of growth in January and the first half of February.

Economic predictions / forecasts that made news headlines

02/28 US deficit ‘accident waiting to happen “The rise in the United States public debt is a serious threat to the whole world if Washington fails to rein it in,” the head of the Institute of International Finance warned on Feb. 25. [There’s a fundamental that is going to cause serious problems down the road, but probably not in 2012, as it can be stayed while other problems like Iran cannot.]

Euro crisis updates as the Great Recession goes viral

02/27 German lawmakers approve new Greek bailout The German parliament approved a second loan bailout for Greece on Monday after Chancellor Angela Merkel warned lawmakers that abandoning the Greeks to bankruptcy involved risks that “are incalculable and therefore irresponsible.”

02/28 Greek Rescue Will Fail; Euro Zone Will Survive Greece has been sacrificed to build a firewall around Europe. It is stuck with sustaining the unsustainable at a cost of tremendous austerity for Greek society without seeing light at the end of the tunnel. “That’s why this package will fail.”

02/28 S&P Declares Greece in Default Greece became the first euro-zone member officially to be rated in default, 13 years after the single European currency was adopted to strengthen the European Union.

02/29 Will Fed Chairman Bernanke Be Right This Time? On the last day of February 2007, Federal Reserve Chairman Ben Bernanke told Congress that “the fundamentals are very strong” for the U.S. economy. This week he said inflation will be only “temporary.” Should we be worried?

Other economic updates / miscellaneous economic news articles

02/28 The US Boon in Low-Cost Borrowing for Federal Debt The euro crisis has prompted a flight to U.S. safety in which investors are lining up to accept the near certainty of small losses on U.S. Treasuries to avoid the possibility of larger losses on stocks, corporate bonds or the debt of other countries.